Logistics Technology Venture Investment

Matt Thompson, Partner And Kevin Wu, Intern, Skyview Capital

Matt Thompson, Partner

Logistics Technology is a very hot space for Venture Investment, impacting virtually all areas of logistics—including warehousing, last mile delivery, supply chain management, and freight. Logistics Tech has a simple, yet expansive goal—to help their clients improve their supply chain. For example, our portfoliocompany,BuyItInstalled.com, helps customers find installers for do-it-yourself projects. Our other portfolio companies, Shipsi and HopSkipDrive, offer shared ride and last mile delivery services. The sector benefits from the tailwinds of some enabling technologies and the impact of the COVID-19 pandemic, driving rapid development and innovation in the sector.

            Several key enabling technologies have expedited the growth of the Logistics Tech sector. Mobile, location tracking, cloud-applications, machine learning/AI, RFID tracking, and Robotics provide the tools that accelerate the development of new Logistics Technology businesses. Mobile and RFID tracking allows for workers to use their wireless devices for tracking inventory. Machine Learning and Artificial Intelligence tools help Logistic Tech companies review large amounts of supply chain data to find anomalies and key insights. Cloud services like Amazon Web Services allow Logistics Technology companies to launch quickly and run secure applications with a low fixed cost structure.   

There are some very interesting Logistics Tech companies that have raised $1B+ valuations in the past few years, each with their own set of characteristics that have propelled them to prominence. Companies can be divided into five categories—warehouse robotics, last mile delivery, supply chain visibility, supply chain management, and ecommerce. Warehouse robotics include companies like Geek+, Locus Robotics, and Fetch Robotics. Last Mile Delivery names includeJumaPeisong, Lalamove, and Bringg. Companies like Convoy, Jusda, and KeepTruckin have brought some incredible innovations to supply chain visibility. Supply chain management companies such as Flexport or Delhivery have enabled businesses to find better supply chain solutions. Awealth of companies like Happy Returns, DoorDash, and Checkout.com have enabled the incredible expansion of ecommerce.

            With so many companies in the sector, it is helpful to evaluate which of the Logistics Tech companies have the best prospects by evaluating them through the 7M investment framework.

  • Market Size: Does the business have a large addressable market?
  • Management Team: Does the business have a strong team, uniquely positioned to serve this market?
  • Moat: Does business have some barrier to entry, whether it is intellectual property (patents) or proprietary software, that allow them to succeed?
  • Mission: Does the company have a strong goal for serving the market beyond just financial metrics?
  • Margins: Does the company have a path to earning strong gross and, eventually, strong EBITDA margins in the next 2-4 years?
  • Momentum: Is the company showing some interesting traction in downloads, users, traffic, revenue?
  • If the company has some of these key M’s, the company may be able to raise the“Money”.

The COVID-19 Pandemic put a lot of strain on global supply chains. Businesses were shutdown which cut production. Demand shifted from services to products, which in turn changed what products were produced and how they were fulfilled. This led to the massive increases in the cost of shipping containers over the past months and severe delays in receiving products from overseas, hampering businesses worldwide.

These trends increase the need and demand for Logistics Technology. Companies that can help their clients manage these challenging times can grow their market share. The list of available opportunities and challenges is comprehensive. There is need for companies to track inbound inventory for delays and to find alternative suppliers. There is need for tools to optimize freight and shipping routes. There is need for increased automation and robotics that can help warehouses increase inventory turns and continue operating even if staff are out sick due to COVID.

            Tech Coast Angels is one of the largest Angel investing groups in the country. We have seen an increase in the number of Logistics Technology startups in the Southern California area over the past several years. The region benefits from a large number of universities, an expansive industrial base, and plenty of former aerospace workers and expertise—all promoting a robust startup culture.

            We expect to see continued investment in the Logistics Tech space in Southern California and the rest of the world as companies seek to resolve the supply chain issue and restore global productivity.

Weekly Brief

Top 10 Logistics Solution Companies in Europe - 2020

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